U.S. insurer Travelers beats profit estimates on premiums growth
2022.07.21 16:26
FILE PHOTO: The logo of Dow Jones Industrial Average stock market index component Travelers Companies is seen in Los Angeles, California, United States, April 27, 2016. REUTERS/Lucy Nicholson/File Photo/File Photo
(Reuters) -Insurer Travelers Companies (NYSE:TRV) Inc reported a smaller-than-expected fall in quarterly profit on Thursday, as record premium growth cushioned a hit from higher catastrophe-related claims and lower returns on investments.
The company’s core income fell to $625 million, or $2.57 per share, in the second quarter ended June 30, from $879 million, or $3.45 per share, a year earlier.
Analysts on average had expected a profit of $1.97 per share, according to Refinitiv IBES data.
The company’s shares were down 1.1% in premarket trading.
New York-based Travelers, often seen as a bellwether for the insurance sector as it typically reports before its industry peers, said net written premiums rose 11% to $9.02 billion in the quarter.
Reinsurer Swiss Re (OTC:SSREY) this month forecast that global insurance premiums will surpass $7 trillion for the first time ever by the end of this year.
Travelers reported catastrophe loss net of reinsurance of $746 million, compared with $475 million a year earlier, impacted mainly by severe wind and hail storms in several regions of the United States.
Global insured catastrophe losses in the first half of 2022 were estimated at $39 billion – 18% higher than the 21st century average of $33 billion, with severe convective storms in the United States and Europe alone accounting for 54% of the total, according to broker Aon (NYSE:AON).
The insurance industry faces hefty claims from the Ukraine crisis and greater uncertainty brought on by higher claims costs from inflation.
Underwriting gains fell to $113 million from $324 million a year earlier, while pretax net investment income dropped to $707 million from $818 million a year earlier.
The company reported a combined ratio of 98.3%, compared with 95.3% a year earlier. A ratio below 100% means the insurer earned more in premiums than it paid out in claims.
